In your commercial litigation case, you need several things for success. One of the essential things is to make sure that the place where you bring your action is a place that has jurisdiction over all of the people or entities from which you seek damages. In a recent South Florida case litigating a joint venture agreement, that proved to be a critical problem. The courts dismissed a key defendant because the Florida statutes did not give the Florida courts jurisdiction, due to a lack of sufficient contact with the state.

The commercial agreement that spawned this legal action was a joint venture agreement for “marketing and selling a software product developed” by the defendants. After the defendants allegedly breached the contract, the plaintiffs, a consulting firm and its shareholder, sued. The plaintiffs alleged that, although the defendants were not residents of Florida, the Florida courts had jurisdiction to take the case because of Florida’s “long-arm” jurisdiction statute. A long-arm statute gives the courts of a state jurisdiction over a case if the defendants committed a tortious act inside that state.

The defendants moved for a partial dismissal, arguing that the president and sole shareholder of the defendant corporation could not be sued in Florida because he did not have adequate legal contacts with this state. The trial court agreed and dismissed the case against the president.

The plaintiffs appealed that ruling but were again unsuccessful. Florida’s Supreme Court created a two-part test in 1989 for deciding if the long-arm statute applied, and Florida courts had jurisdiction over a particular non-resident defendant. The key for the plaintiffs’ case was the second part, which demanded that the plaintiffs establish that “the defendant’s conduct and connection with the… state are such that he should reasonably anticipate being” brought into court in that state. One method of meeting the requirement is “committing a tortious act” in Florida. The plaintiffs alleged that the president committed fraudulent inducement in Florida by making certain promises to the plaintiffs, some made in person in Florida and others made through communications sent into Florida.

This argument failed to work for procedural reasons. The appeals court acknowledged that the plaintiffs had some “general allegations” that might support the notion that the president committed fraudulent inducement in Florida, but those allegations could not save the plaintiffs’ long-arm jurisdiction argument because their lawsuit did not allege that the president or any of the defendants committed fraudulent inducement; their case was only for breach of contract. The plaintiffs didn’t plead it in their complaint, and they didn’t argue fraudulent inducement during their evidentiary hearing. Without a claim of fraudulent inducement, the allegations of fraudulent inducement did nothing to bring the president under the jurisdiction of Florida courts.

Whenever you seek to go to court to pursue another entity or its shareholders, it is very important to make sure that you are procedurally prepared to take on your case. Are all of the entities or individuals you desire to sue subject to the jurisdiction of the court where you plan to bring your case? Does your complaint have everything in it, from factual, legal, and procedural perspectives, to do what you need? For answers to these and other questions, retain the services of experienced commercial litigation counsel. The knowledgeable South Florida commercial litigation attorneys at Stok Folk + Kon have a long history of helping business clients in their contractual disputes, helping make wise litigation decisions and putting together strong cases.

Contact us online or by calling (305) 935-4440 to schedule your consultation and find out how this firm can help you protect your interests.